IEA Sees Oil Market Moving Back Into Balance

Oil refineries in the USA are coming back online and increasing their demand for crude after several Hurricanes rampaged through the southern states and delayed refinery operations.

Hurricane Harvey caused substantial disruptions to crude oil and petroleum product supply chains and increased petroleum product prices, according to a recently published report from the U.S. Energy Information Administration (EIA).

Iran Heavy, the country's main export grade and one of the 14 crudes of OPEC Reference Basket, traded at $48.70 per barrel last month, an increase of 5.8% from July.

Global oil supply meanwhile fell in August by 720,000 b/d on unplanned outages and scheduled maintenance, mainly from countries outside of the Opec cartel, the IEA said.

With Thursday's strong market showing contributing to a week of solid growth for crude, analysts are trying to determine what lies immediately ahead for the commodity - and if BP's opinion carries any weight, what lies ahead is prices stuck in a range of $50-$60.

The IEA report confirmed the same trend highlighted in OPEC's August report out the day before.

Oil hasn't managed to settle above US$50 in NY since July 31 as efforts by the Organisation of Petroleum Exporting Countries and partners including Russian Federation to whittle the supply surplus floundered.

"The IEA revising up its 2017 global oil demand growth forecast, together with persistent weakness in the US dollar index, has prompted bullish sentiment in the oil market".

This week, Opec and its allies were said to be discussing extending supply cuts past the end of March, and compliance with the supply limits rose to 96 per cent in August, Opec data from so-called secondary sources showed.

That is partly because of a continued surge in USA shale production, along with unexpected spikes in production from Libya and Nigeria - two OPEC members exempt from the deal because their oil industries had been disrupted by political instability.

Oil supply from outside of OPEC is expected to grow by 780,000 b/d in 2017, unchanged from last month's report, to 57.8 million b/d.

The IEA report has raised its 2017 oil demand growth estimates to 1.6 million barrels per day (bpd) from 1.5 million bpd. This is an upward revision of around 50,000 b/d, with total consumption forecast at 96.8 million b/d.

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